GBP/USD price holds steady as traders await Central bank decisions
GBP/USD stabilizes near 1.2700 amid rate decision expectations
The GBP/USD pair maintained stability near the 1.2700 level on Wednesday as traders awaited critical economic updates, including the Federal Reserve's (Fed) policy announcement and the UK Consumer Price Index (CPI) data release. The Cable recovered from last week’s losses, extending a two-day win streak with a 0.2% gain on Tuesday.
US economic updates added complexity to the market outlook. While US Retail Sales rose 0.7% in November, signaling economic resilience, inflation concerns lingered, prompting markets to price in a 95% probability of a 25 basis-point rate cut by the Fed. Investors are keenly focused on Fed Chair Jerome Powell’s press conference and the dot-plot projections for policy guidance in 2025.
GBP/USD chart ( Nov 2024 - Dec 2024) Source: Trading View
UK Economic Indicators in Focus
On the UK front, November’s CPI data is expected to reveal a sharp drop in headline inflation to 0.1% MoM from 0.6% in October, though core inflation could rise to 3.6%. The Bank of England (BoE) is forecast to hold rates steady, with an eight-to-one vote in favor of maintaining the current policy stance.
Technical analysis highlights GBP/USD’s consolidation around the 1.2700 mark, reflecting cautious trading ahead of major announcements. The 1.2600 support level remains crucial, while resistance looms near the 200-day EMA at 1.2820.
The GBP/USD pair's next move will depend heavily on how central banks navigate inflation dynamics and economic growth prospects. A hawkish surprise from the BoE or a cautious Fed could alter the pair's trajectory, setting the stage for potential volatility in the days ahead.
Previously, we discussed GBP/USD's resilience supported by robust UK PMI data and cautious US inflation expectations.
